Confidence boost for UK shoppers fails to improve high street retail sales
High street retail sales continued to fall in February despite a confidence boost for UK consumers, a survey has found.
Overall, retail sales increased by 1.1 per cent in February, according to the British Retail Consortium (BRC).However, this was driven by food sales, which grew 2.3 per cent year-on-year. Non-food sales were flat in February, while in-store non-food sales – high street sales – fell one per cent.
“Consumers remain cautious with their spending and many are continuing to prioritise saving, travel and experiences,” Linda Ellett, UK head of consumer, retail & leisure at KPMG, said.
“Nervousness about the economy is deferring other big ticket purchasing, but occasions and offers are still tempting shoppers into some impulsive spending,” Ellett added.
Chief executive of the BRC, Helen Dickinson, said that non-food sales were “propped up by online purchases”.
The proportion of goods bought online continued to grow, increasing to 36.4 per cent this February from 35.8 per cent in the same month last year.
“[High street shops’] weak performance makes many retailers uneasy… The industry is already doing all it can to absorb existing costs, but they will be left with little choice but to increase prices or reduce investment in jobs and shops, or both,” Dickinson said.
Ellett added: “Online non-food sales growth is outpacing in-store and while shops will always be a key part of many retailers’ strategy – rent, rates, and employment costs all must be factored in.
“As we have seen already this year, firms are increasingly scrutinising where best to be located and the implications of the likes of recently announced employment cost rises.”
Confidence rises in February
CEO of IGD, Sarah Bradbury, said that rising shopper confidence had risen due to wage growth and the impending rise in the National Living Wage, although this didn’t translate into high street sales.
Consumer confidence rose in February to -7, seven points better than February 2024, according to GfK.
“The biggest improvement [in February] is in how consumers see their personal finances for the coming year,” Neil Bellamy, Consumer Insights Director at NIQ GfK, said, adding that the Bank of England base rate cute will have “brightened the mood for some people.”
However, Bradbury concluded that despite the mood lift, “shopper confidence is expected to remain volatile in response to the external environment.”